Processors’ Perspective: Farm Bill Debate Continues

November 6, 2013 — It looks like the Farm Bill debate is finally nearing a conclusion and dairy policy remains one of the key issues yet to be resolved. IDFA’s Jerry Slominski provided the

Jerry Slominski, IDFA

Jerry Slominski, IDFA

Processors’ Perspective on Wednesday’s DairyLine Radio program:

Given the fact that the House of Representatives voted down supply management by 291-135, a more than 2-1 margin, even season veterans of many Farm Bill’s like Mary Kay Thatcher, the lobbyist for the American Farm Bureau, are predicting that the controversial stabilization program is not very likely to be included in the final Farm Bill.

As a result it is becoming clear that Congress is coalescing support behind the Dairy Revenue Insurance Programs that are both in the House and Senate bills, looking at ways to help and improve that important policy.

Just this week, for example, Dr. Marin Bozic from the University of Minnesota released a paper concluding that both the House and Senate dairy titles will be “very effective in providing catastrophic dairy margin insurance.”

Dr. Bozic recommends that Congress insert a six month time lag between when a farmer decides to sign up for margin insurance and the start of the coverage period. He says this is an important feature to include in the farm bill for dairies because they will help stabilize prices and insure that decisions are based on risk management rather than gaming the system to maximize indemnities from the government.

Those who are concerned over the possible cost of the insurance  programs are surely taking a look at Dr. Bozic’s recommendations.

Another dairy compromise is recently proposed by academics at Ohio State and Illinois. This option would allow farmers an annual sign up choice between either the MILC program or the new margin program, giving greater flexibility in this management option to both small and large farmers under a variety of situations

As the Farm Bill conference moves forward, its members will gravitate towards the areas where there is strong bipartisan consensus. In dairy, we believe they will look to improve upon the proposed new margin insurance program that both producers and processors support. That program is a common ground, compromised dairy policy that has been endorsed by both the House and Senate and will allow our dairy industry to grow and thrive.

Processors’ Perspective

February 6, 2013 — IDFA’s Jerry Slominski has this week’s Processors Perspective:

We think that the farm bill extension, included in the fiscal cliff agreement, was the right approach for dairy. While we support reforming our dairy policies and agree that Congress needs to take a longer look at our farm program, it is not a failure that Congress did not pass a BAD farm bill. It is an opportunity to focus on what is most important to us as an industry to work together on what we all agree on.

Nearly everyone agrees that dairy farmers need a safety net, then let’s get together and support programs that help producers through difficult financial times. But the divide over supply management is real and wide, despite what you may hear from its supporters.

The evidence that supply management won’t work is big and getting bigger. Supply management hasn’t worked in other countries, and it has not worked here with other commodities. As a result, opposition to the policy is growing and getting bigger. Rather than something that can be forced into a last minute budget bill, dairy supply management is a major impediment and stands in the way of getting a five year farm bill through Congress.

Even the American Farm Bureau Federation seems to be looking for a way towards consensus. During their annual conference, they approved a dairy policy study committee and were quoted when asked about current dairy policy reform efforts, that “we wouldn’t have supply management as part of that package” except that they are worried about available funding for margin insurance on its own. My translation is that they know it is bad policy to limit growth and exports but believe is it necessary for budgetary reasons.

Well, they do not have to worry. The Congressional Budget Office reviewed a proposed margin protection plan for dairy producers that was not tied to the so-called stabilization program, and reported that this plan cost slightly less than the Dairy Security Act with supply management. So funding is not the issue, it can be worked out. It means that you can have a margin insurance program just like other ag sectors, without the government telling you how to run your farm.

That stand-alone approach, authored by Representatives Bob Goodlatte (R-VA) and David Scott (D-GA), would authorize a margin protection program without USDA-imposed limits on production. Consumer groups, taxpayer advocates, the restaurant and food industry, and a growing number of dairy farmers agree that this is a better approach to reforming dairy policy.

Audio Version:

Processors Perspective: Dairy Security Act Proposal Loses Momentum

March 6, 2013 — Jerry Slominski, IDFA’s Sr. VP of Legislative Affairs has this week’s Processors’ Perspective:

Processors Perspective on Flavored Milks

On the farm, milk comes in only one flavor but, as you take a walk down your grocery store aisle or a school lunch line, you’ll see many more, according to Michelle Matto, Assistant Director, Nutrition and Labeling at the International Dairy Foods Association. Speaking in Wednesday’s “Processor’s Perspective,” Matto made the point that flavored milk encourages kids to drink milk.

Chocolate has been joined by strawberry, vanilla and other flavors to tempt the tastebuds of the American consumer, according to Matto, while providing all the nutrient benefits of milk.

Chocolate, and other flavors of milk, start with white milk and have flavoring and sweeteners added, she said. In general, they meet the standard of identity for milk, including the required levels of milk solids, and are available in a variety of calorie and fat levels.

There are also rich “milkshake” type products for people looking for a special treat and there are fat-free, no sugar added products for those that want great taste and nutrition with fewer calories, according to Matto.

She reported that, in 2007, almost 4.4 million pounds of flavored milk was sold in American retail stores; or about 8 percent of total retail milk product sales. Per capita consumption was 14.5 pounds, an increase from about 12 pounds per person in 2000 and “is an area of growth amid the continued decline in milk consumption,” she said.

While children can select from a variety of milks, Matto said it’s not surprising that most milk sold in schools is flavored, with the majority being lowfat. “This is a great option for children to enjoy the nine essential nutrients of milk,” she said, and “It’s particularly important for milk to be attractive to children because most kids over the age of 8 are not drinking enough.”

Dairy processors are working to formulate new flavors and products with different levels of fat, sugar and calories to meet the demands of consumers, especially school districts, Matto reported, and these products may use different flavoring systems, or a combination of caloric and non-caloric sweeteners, while still meeting the standard of identity for milk.

“By providing more choices, milk can better compete with other beverages,” she concluded. “When adults and children drink more flavored milk, they drink more milk, getting the nutritional benefits and supporting the dairy industry.”

Processors Perspective: Add Yogurt to WIC program

Dairy processors are on board with the federal government buying additional dairy products to help struggling dairy farmers, according to Peggy Armstrong of the International Dairy Foods Association.

“When you take a look at how this funding could be used by one program, USDA’s Women, Infant and Children’s program, or WIC, it’s clear that this approach has long-term benefits for consumers, dairy producers and processors.”

The WIC program provides nutrition education and retail food vouchers to almost 10 million low-income mothers, infants, and children, according to Armstrong, and dairy products are a critical part of its nutritional food packages because they provide nine essential nutrients and the protein and calcium that are especially important for women who are pregnant and young children.

IDFA estimates that approximately $2 billion will be used by WIC participants to buy dairy products, Armstrong reported, however due to changes in the program, WIC does not allow yogurt to be included, despite a recommendation to do so from the Institute of Medicine. In 2008 USDA said it would cost an additional $88 million a year to allow for the yogurt purchases, which was not part in the budget.

“Today, we have the opportunity to use some of the emergency appropriation to add yogurt to the WIC program,” Armstrong said. “Offering yogurt as a dairy option for mothers that use WIC would introduce a whole new generation to its nutritional health benefits, increase demand for milk in many states, and help bolster long-term demand for dairy products among a segment of the population that so critically needs it.” “It is time to ask USDA to include yogurt as an allowable dairy product under the WIC program,” she concluded.

Processors Argue Against Supply Managment

June 5, 2013 — This month’s Processors Perspective is with Jerry Slominski, head of the government affairs team with the International Dairy Foods Association.

Processors Oppose Proposal to Increase Milk Solids in Fluid Milk

IDFA’s Peggy Armstrong gave the “Processors Perspective” in Wednesday’s DairyLine, reporting that, in August, the Food and Agricultural Policy Research Institute issued research findings on the proposal to require national adoption of higher nonfat-solids standards for fluid milks, which have been required under California state law for decades.  

According to the report, the added milk solids, limits consumer choices, raises milk prices, and unnecessarily increases costs for government-run nutrition and feeding programs. Armstrong added that “Contrary to encouraging low-calorie options in the marketplace, the added solids will increase the calories per serving of milk.”  One key conclusion of the report, she said, is that such a policy change would result in an average increase of 17 cents per gallon in the retail price of fluid milk products due to the added cost of the additional nonfat solids. The report notes that “Fluid milk processors will have additional capital costs for storage tanks and other equipment that will be necessary to handle the increased need for nonfat solids.” 

“Higher standards for nonfat solids in milk have not increased consumption in California,” Armstrong argued, “In fact per capita fluid milk sales are lower in California than in the rest of the nation.”  “IDFA believes that dairy policy proposals that could reduce milk consumption and limit exports are not good for the future of the U.S. dairy industry,” she concluded. “Instead we need proposals that focus on ways to make our industry more competitive with other beverage choices in our domestic markets and ways to promote exports in the growing world market for dairy products.”

Processors recommend government feeding programs…

Dairy processors have made some recommendations to the new Agriculture Secretary on ways to improve government feeding programs and increase demand for dairy products. The international Dairy Foods Association’s (IDFA), Peggy Armstrong, said in Wednesday’s “Processor Perspective” that, “With the recent steep drop in farm-level milk prices, dairy producers are beginning to feel the full impact of the global recession and, while it’s likely that the support programs under last year’s Farm Bill will be triggered, they may not be enough to balance supply and demand.” 

 

Historically, many surplus dairy products bought by the government go into storage or wind up competing with other commercial products, Armstrong charged, which can drive prices even lower.

 

“IDFA sees another way,” Armstrong said, and, in a letter to Secretary Tom Vilsack, IDFA President and CEO Connie Tipton asked USDA to take a careful look at what it can do to bolster dairy demand in ways that will increase access to healthy dairy products for a growing number of needy people, outlining a three-point plan.

 

IDFA urged USDA to convert any surplus into consumer-oriented dairy products, using dollars that otherwise would be spent on transportation and storage. Updating specifications for products purchased under the Dairy Price Support Program to reflect current commercial practices would make it easier for companies sell products to the government under this program, she said.

 

Currently most dairy products aren’t purchased under the price support program. So, as a second step IDFA recommends “stimulus purchases” of products such as yogurt, and additional funding for reduced-fat and lower-fat cheeses that can be used in schools and other institutions. 

 

Thirdly, IDFA encourages USDA to finalize the Special Supplemental Nutrition Program for Women, Infants and Children rule to include yogurt, which was recommended by the Institute of Medicine, according to Armstrong.

 

“We believe this approach creates a better safety net for farm prices, and gets more products moving to consumers, many of whom are losing jobs and depending on food assistance to feed their families,” she concluded.

 

On December 18, 2008, the Environmental Protection Agency published a final rule that exempted animal waste from emissions reporting under certain EPA regulations. In this same rule, however, the EPA determined that another type of reporting is still required and the effective date for this rule is January 20.

 

There’s a lot of confusion over what EPA is going to require of dairy farmers and there have been threats of lawsuits from environmental groups and from the dairy industry over this rule. Want more dairy news? Click Here

IDFA: “The Fight Over Federal Dairy Policy Has Ended”

Jerry Slominski, IDFA

Jerry Slominski, IDFA

February 5, 2014 — Despite disagreements over the dairy stabilization program, there was broad agreement across our dairy industry that the current program should be retired and replaced with a new revenue insurance program based on margins. IDFA’s Jerry Slominski tells us more in our monthly “Processors’ Perspective’ podcast.

 

Good News From World Dairy Situation Report

November 27, 2013 — There is good news for dairy farmers and dairy companies in the annual World Dairy Situation report, which was released last month by the International Dairy Federation.

Peggy Armstrong, IDFA

Peggy Armstrong
IDFA

IDFA’s Peggy Armstrong updated DairyLine listeners in this month’s “Processors’ Perspective.” This year’s report  sees a bright future for dairy: “The long run prospects for dairy globally are encouraging increased investment in the sector and are a cause for industry confidence,” it says.

In 2012, world milk production increased 2.2 percent from the prior year, and world output increased for every kind of dairy product.  Global per capita availability of milk in 2012 was on average 109.4 kilograms, up 1 percent from 2011.

All this dairy growth resulted in world dairy trade reaching 61.9 million metric tons in 2012, an increase of 8 percent compared to 2011, which is double the average of 4 percent during the previous 10 years. The report notes this “reflects the increasing geographical imbalance between production and consumption of dairy in the world.”

Meanwhile, dairy consumption is growing the most in South America, Asia and Africa.  Between 2005 and 2012, per capita consumption of dairy grew 27 percent in South America, led by large increases in Brazil, Columbia and Venezuela.  In Asia, dairy demand growth led to a 22 percent per capita increase in that region.  And in Africa, where dairy per capita grew overall by 16 percent between 2005 and 2012, large increases were noted in Algeria, Kenya and Egypt.

The report attributes the growth in dairy trade to the fast-growing demand in emerging countries that exceeds the capacity of local dairy production and processing, and will continue to drive increases in world dairy trade to meet that demand. You can read more about the world dairy situation in Dr. Bob Yonker’s Dairy Market Update at www.idfa.org.

 

 

 

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